In 2014, the Florida Legislature authorized the medical use of low-THC cannabis, the Charlotte’s Web strain, and directed the Florida Department of Health to authorize five “dispensing organizations” to provide patients with the drug. A “dispensing organization” was defined as “an organization approved by the department to cultivate, process, AND dispense low-THC cannabis.” Thus, the Legislature initially envisioned a vertically integrated supply structure. There are currently twenty-two organizations licensed to produce and distribute medical cannabis in Florida, although many do not do so.
In the 2016 Election, the Florida Constitution was amended to allow for the legal use of medical marijuana under certain conditions. The Amendment defines a Medical Marijuana Treatment Center (MMTC) as an entity that acquires, possesses, processes…transfers, transports, sells, dispenses, OR administers marijuana, products containing marijuana, related supplies, or educational materials to qualifying patients or their caregivers and is registered by the Department. Many scholars believe this wording evidences an intent to transition Florida away from a vertically integrated structure.
In 2018, the Florida Legislature amended Fla.Stat. §381.986, which is the State’s medical marijuana statute. Specifically, under 381.986(8)(e) a licensed MMTC shall cultivate, process, transport, AND dispense marijuana for medical use. While this language is consistent with the State’s prior medical marijuana legislation, this difference between the Statute and Amendment, among other factors, has sparked a high profile litigation known as Florida Department of Health v. Florigrown, LLC. The case presents a Constitutional challenge to the current Statute’s mandate of vertical integration for MMTCs. Florigrown is currently pending before the Supreme Court of Florida and has been pending before the Supreme Court since late 2019. The matter has been fully briefed, initial oral arguments were held in May of 2020 and, in an unusual move, the Supreme Court held additional oral argument in October of 2020. Yes, it’s been a while so we expect the decision to come out any day now.
It is not surprising that the Florida Supreme Court is taking its time as this opinion could lead to a seismic shift in the Florida cannabis landscape. If the current Statute is held to be unconstitutional then a new horizontal structure could emerge whereby licensed MMTC could participate in one segment of the cannabis business such as dispensing, cultivation, or transportation, rather than having to undertake all three—a highly capital intensive endeavor. It will also likely lead to many new entrants into the Florida cannabis market. If the Statute is upheld then the current operators will likely continue to have a stronghold on Florida’s medical cannabis market. Either way, this Supreme Court decisions will be an important benchmark for the cannabis industry and the state of play in Florida.
Thus, after years of stagnation, Florida could come out of the gate strong next year as Floridians (and the cannabis industry) also await the Supreme Court’s advisory opinion on another proposed amendment to the Florida Constitution that would allow for “adult use.” Oral arguments took place in May 2020 and the Court’s opinion is likewise expected any week. If the Court determines that the potential amendment is valid then Florida voters may have the opportunity to legalize recreational cannabis at the polls in 2022.
We are watching Florida closely so stay tuned to our blog for more updates and developments in the cannabis industry.